Alejandro Jodorowsky, the one-time king of the midnight movie, can still be seen every night at the witching hour - but only on Spanish TV. This white-bearded 78-year-old has a new sideline presenting the "... and finally" items on the nightly news. He scours the papers and websites for these heartwarming little snippets and then records them in a block; 30 every month. They are his antidote to a litany of tragedy and disaster, a little balm for the soul as the clocks strike 12. "The planet is ill, everyone knows that," he says. "But I need to be optimistic, otherwise I would just be adding to the negativity. So every night I come on Madrid TV and read a piece of good news."

These days Jodorowsky has a snippet of his own to report. The director recently ended his notorious 30-year feud with Allen Klein, the hardball executive who once managed the Beatles. It was Klein who helped promote the US release of El Topo - America's original "midnight movie" - and it was Klein who stumped up the funds for its extravagant follow-up, The Holy Mountain. And, when the two men fell out, it was Klein who yanked both films out of circulation, turning them into cinema's equivalent of Bigfoot and the Mary Celeste. Now the world finally has the chance to judge them afresh.

I meet Jodorowsky at his Paris apartment, in a book-lined room patrolled by cats. "Are you afraid of cats?" he asks. "Some people are." He explains that he lives alone but has a woman - a new woman - moving in with him soon and that he is having the place repainted in readiness. "Five cats and a woman. That is all I need in life." His grin exposes a spectacular set of teeth. They can't be real, but maybe they are. With Jodorowsky it's sometimes hard to separate the fact from the fiction.

Jodorowsky's life reads like a picaresque, or the plot of a magic-realist novel. He was born in Chile, of Ukrainian Jewish descent, but abandoned his family at an early age "because my father was a monster, and my mother was as well." Alighting in Paris in the 1950s, he studied mime with Marcel Marceau and directed Maurice Chevalier in music hall. Relocating to Mexico, he founded an avant-garde theatre group and scandalised the Catholic priests, who believed he was holding black mass orgies in the cathedral. "In Mexico they want to kill me!" he exclaims. "A soldier held a gun to my chest!"

In 1970 he directed El Topo, a deranged peyote western that some have interpreted as a metaphor for the Old and New Testaments. It starred himself as a cold-blooded gunslinger in rabbinical black and his son Brontis, buck naked beneath a Stetson hat. El Topo eventually came to the attention of John Lennon who hailed it as a counter-culture masterpiece. Lennon introduced the film in New York, where it later played in special midnight screenings for almost a year. He also convinced Klein to stump up $1m for Jodorowsky's ambitious next production. And that's where the trouble began.

I watch El Topo and it stands up pretty well; a shotgun wedding of Sergio Leone and Federico Fellini: primal and pretentious in about equal measure. Then I watch The Holy Mountain and it's as though the world has gone widescreen. It's astonishing, outlandish; unlike anything made before or since. The plot in a nutshell concerns a thief who meets an alchemist (Jodorowsky again) and embarks on a quest for immortality. Yet the movie comes riddled, top to tail, with all manner of extraordinary setpieces. The most notable of these depicts the conquest of Mexico, re-enacted with chameleons dressed up as Aztecs and toads playing the Conquistadors. "Klein hated The Holy Mountain," says Jodorowsky ruefully. "He think I am crazy."

Matters reached a head when the director abruptly bailed out of Klein's next project, The Story of O. "I did not want to make a sexual film, because I am a feminist. So Klein says, 'OK, if you don't want to make this picture I will take your other pictures and no one will ever see them again'. And that's what he did. He took all the copies and he retired them." For three decades the films existed only as poor quality bootlegs. Jodorowsky would collect these bootlegs and circulate them among his nearest, dearest ... and anyone else who expressed an interest.

The front door bangs and a woman enters the room. "This is my ex-wife," he explains breezily. "We are very good friends." It turns out that the former Mrs Jodorowsky has dropped by with some magazine clippings. More good news for his TV broadcasts.

Two years ago Jodorowsky learned that the El Topo negative had been discovered in a laboratory in Mexico. His first thought was to call Klein's bluff and release it off his own back. Finally he decided to contact his old enemy and the pair agreed to meet in London. "For 30 years I hate him and he hate me," he recalls. "I thought I should take a weapon in case he wants to kill me. Then the hotel door opened and there was this little old man with white hair, just like mine. He said, 'You are not a monster. You are beautiful'. And the whole thing, all that hate, was finished in 10 seconds." Jodorowsky later supervised the re-mastering of both El Topo and The Holy Mountain; sharpening the colours, making the movement more fluid. Finally, he says, he has the films exactly as he wants them.

These days the director has found a fresh lease of life writing comic-books and studying the tarot. He presents me with gifts: a CD recorded by his youngest son, Adan, and a deck of cards he designed himself. He says the tarot has helped him make peace with his past and become a better father to his children. He says that he now returns to Chile to give readings for the president, Michelle Bachelet. He even has the photo to prove it. "That's her," he says. "Admiring me."

Jodorowsky refers to himself as "the world's last crazy artist". But as far as film-making is concerned he is now a king without a kingdom. He shot his last picture, The Rainbow Thief, as a hack-for-hire back in 1990 and has since disowned it. He still dreams of making a gangster picture starring Nick Nolte and Marilyn Manson. But he needs $5m and the cash keeps falling through.

In the wake of The Holy Mountain he embarked on an abortive attempt to adapt Frank Herbert's Dune (later made by David Lynch). When the backers pulled the plug, several members of Jodorowsky's core creative team jumped ship to work on Ridley Scott's Alien - reportedly taking many of the film's ideas with them. More recently his comic-book editor launched an unsuccessful lawsuit against Luc Besson. It was alleged that The Fifth Element was heavily indebted to Jodorowsky's comic-book series, The Incal. For his part Jodorowsky insists that he is not embittered by any of this. On the contrary, he is happy that other directors have picked up his ideas. "They like me and they copy me," he says. "That is very flattering."

Out of the blue he tells a tale from the past, from his bad old days in Mexico City. He explains that the winner of a cockfight is judged to be the last bird standing; the one that does not put its beak to the ground. But some cocks are so ferocious and so full of intensity that they literally die on their feet, with their beaks inclined towards the sky. Meanwhile the other bird survives a little longer, staggering drunkenly for a spell before expiring in the dirt. According to the rules, this bird "loses" and the other bird "wins".

Belatedly I realise that Jodorowsky is talking about himself. "I want to live to be 120," he says. "But of course I am getting old. And yet even if I get old, even if I die, the ideas live on. And that way I continue." He points his head to the ceiling and bares that terrific set of teeth. In that brief moment they look as real as real can be.

·El Topo is out on Friday, and a retrospective is at the NFT, London, April 5-19. The Jodorowsky DVD collection is released on May 14

Th 84-year-old director rolled into Cannes this week to discuss his latest film La Danza de la Realidad, a magic-realist memoir of his youth. He talks about his troubled childhood, his passion for psychomagic – and why ageing doesn't trouble him